Looking Back Tells Us
What’s Ahead for the FTC
As those of you who were paying attention in
class remember, the month of January is named
for the Roman god Janus, who had two faces
and could look forward and backward at the
same time. For regulatory lawyers, January is a time to figure out what the government might be up to in the coming year by looking back at what it did last year.
If you want to figure out where the Federal Trade Commission (FTC) is headed in the upcoming year, a good
place to start is the agency’s recently published “
Performance and Accountability Report” for 2006.
Read this report and you will learn that the FTC’s first
step in picking enforcement targets is to analyze the consumer complaint data in its Consumer Information System
(“CIS”) database, which compiles not only the consumer
complaints the FTC receives, but also data from other government agencies (including some in foreign countries),
consumer groups and the Better Business Bureau.
In 2006 alone, the FTC entered more than 1 million
consumer complaints and inquiries into the CIS database.
About a third of all those consumer complaints and inquiries related to identity theft — a problem that didn’t
even exist just a few years ago.
The CIS is used not only to help the FTC choose enforcement targets, but is also shared with some 1,600 national and local law enforcement agencies in the U.S.,
Canada and Australia. The FTC is exploring new international partnerships as well. In 2006, the FTC and other enforcement agencies searched the CIS database more than
100,000 times — about four times as many searches as
were performed just three years ago.
The “Performance and Accountability Report” says
that the net cost of the FTC’s consumer protection activity
was about $100 million last year, and estimates that the
agency saved consumers approximately $293 million by
stopping fraudulent practices — not a bad return on tax-
payer investment. That’s not as good
as the FTC hoped for, however.
Its goal is to save consumers $400
million annually over a five-year period. That means the FTC has to
make up some ground in the coming
year, so don’t expect them to take it
easy on you. They’re in the position
of a local traffic cop who isn’t writing enough speeding
tickets to meet his quota by the end of his shift.
What was the FTC focused on in 2006, and what will
be its priorities in 2007?
1. Data Security and Identity Theft. The FTC views itself
as the leader of the government pack when it comes
to this issue, and you can expect more cases like the
recent one against ChoicePoint Inc., which paid $15
million for allegedly compromising the financial
records of 163,000 consumers in its database.
2. Spam. The FTC worked with federal and state enforcement agencies to shut down several spamming
operations last year, and will push for greater cross-border anti-spam activity in the future.
3. Spyware and Adware. The agency won millions of dol-
lars in judgments from several spyware and adware
marketers last year, and more cases are on the way.
4. Business Opportunities (including “work-at-home”
schemes). The FTC not only went to court against a
number of business opportunity sellers last year, but
also published a proposed “Business Opportunity
5. “Do Not Call” Registry (and other telemarketing enforcement). The FTC brought a variety of cases involving
alleged violations of the Telemarketing Sales Rule, including one fine of more than $5 million in a DNC
6. Health Fraud. The poor will always be with us, accord-
ing to the Bible, and so will FTC cases involving
health fraud — especially bogus weight-loss claims.
7. Hispanic Law Enforcement and Outreach. The FTC has
stepped up its law-enforcement efforts against those
who advertise in Spanish-language media.
8. Criminal Liaison Unit. Sounds like a new “Law and
Order” spin-off, doesn’t it? The FTC wants to help its
criminal enforcement counterparts put serious law vio-
lators behind bars. Last year, dozens of FTC defendants
were sentenced to jail or other criminal penalties.
Look for the FTC to increase the time and effort it devotes to identity theft and technology abuses (including
spyware and spam) in 2007. But don’t expect the FTC to
ease up on its traditional enforcement priorities — including false or unsubstantiated health-related claims for drugs,
devices, dietary supplements and get-rich-quick schemes. ■